Taiwan-based Pegatron, an iPhone supplier to Apple, says it will focus on expanding outside China, after its factories on the mainland were hit hard by Covid lockdowns.
The company was forced to suspend work at its plants in Shanghai and Kunshan in April, which hurt its production and delayed deliveries.
The restrictions have now been lifted but Pegatron now plans to “emphasize” its plans to expand to Vietnam, India, Indonesia and North America, a senior executive at the Taiwanese firm said on Wednesday.
In China the company is still facing labor shortages, exacerbated by Covid-19 restrictions, president Liao Syh-jang told an annual shareholders meeting in Taipei.
“We faced Covid controls for two months,” he said.
“We couldn’t have assessed that in advance, so that makes me emphasize our expansions in Vietnam, India, Indonesia and North America, to solve our labor shortage, the gap between peak and low seasons, and to increase the utilization of our production capacity,” Liao added.
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In recent years, Pegatron has sought to expand its footprint in Asia and North America.
Chairman TH Tung said the group’s customers had “different reasons” for setting up factories in Vietnam, India and Mexico.
“But one shared factor is the ability to reduce concentration in Shanghai, Suzhou, Chongqing,” Tung said, adding that recruiting staff in China has become increasingly difficult over the past seven to eight years.
Tung said that with the Covid pandemic easing globally, China coming out of its lockdowns to control the coronavirus and the electronics industry’s peak season coming later in the year, the rest of 2022 should be much better for the company.
“Combining these factors, I expect the second half of the year to be better, or a lot better, than quarter two.”
Foxconn – another Taiwanese firm which is the world’s largest contract electronics maker and also assembles iPhones – predicted last month the the second half of 2022 would see more stable supply chains.
• Reuters with additional editing by Jim Pollard